Understanding Trademark Violation Damages 了解商标侵权损失

Facing a lawsuit for trademark violation in the U.S. involves several stages of grief and consternation. From my experience in representing defendants in U.S, trademark violation cases, these stages are as follows:

在美国涉嫌商标侵权诉讼涉及几个阶段的悲伤和惊愕。 根据我在美国代表被告的经验，商标侵权案件，这些阶段如下：

Stage 1: Paypal Stole My Money! This is an understandable first reaction. It is, after all, Paypal that held your funds and your account statement still shows the funds on balance in your account. As explained in my article Don’t Blame Paypal for Account Freeze, Paypal is just following a court order. Funds are frozen due to an order of the federal district court that Paypal has no choice but to follow.

Stage 2: How did this even happen? I am in China! How am I being sued in the U.S.? This is also a very logical to question to ask. As I explain in detail in my article on Jurisdiction for U.S. Trademark Violations, in short summation, placing items online for sale into the U.S. subjects the seller to the jurisdiction of U.S. courts whether or not there are actually any sales.

Stage 3: Did I infringe a trademark? What are they even talking about? I do not sell counterfeit goods. In my article entitled Did I Infringe a Trademark?, I answer many questions about what constitutes infringement. Violations may involve seemingly small things like the appearance of a pattern, the red tab that signifies Levis jeans or something that is not apparent to most people as involving a trademark.

Stage 4: So what do I stand to lose? $2 Million?! How could this be? Now that you have progressed through the first three stages of grief and consternation, you begin to consider what to do. You could do nothing but then what happens? Read my article The Consequences of Not Answering a U.S. Trademark Violation Suit and you discover that not only will you lose all of your funds but a judgement will issue against you, usually in the amount of $2 Million. $2 Million?! How could this be? I did not sell any of the allegedly infringing items. Or I only sold three. This cannot be right. How can trademark violation damages award be so high for such a small thing?

And now we arrive at the subject of this article, Understanding Trademark Violation Damages.

现在我们来了解这个文章的主题，了解商标侵权损害。

The three types of damages that a plaintiff suing for trademark violation may collect are set forth in 15 USC § 1117: (1) defendant’s profits, (2) any damages sustained by the plaintiff, and (3) the costs of the action. Each type of damages has specific requirements and standards of proof that a plaintiff must prove in order to be granted a judgement.

When a plaintiff demands profits or disgorgement, what they asking for is the return of any profits that an alleged infringer has made from the sale of their goods or of other goods that were allegedly sold under the plaintiff’s mark. So if ten allegedly infringing items were sold for a total of $100, plaintiff would demand $100. Plaintiff is required to prove the ten sales. The burden then shifts to the defendant to prove the amount of any deductions. So if the cost of the allegedly infringing goods was $50, the plaintiff can only collect $50 as profits but the defendant must show through the submission of receipts or other evidence that $50 was in fact the cost of the allegedly infringing items. It could be that there was no profit at all or the profit very small so that the award in inadequate. It may also occur that the award based on an accounting of profits is too high. The judge, in his or her discretion, may increase the amount of an award of profits or decrease it in order to achieve a fair result.

It is by demanding an accounting for profits that plaintiffs are able to obtain an asset freeze. A temporary restraining order or an injunction is available to prevent the dissipation of funds that were allegedly gained through unauthorized use of plaintiff’s marks. Unfortunately, in the opinion of this practitioner, as will be addressed in detail in an upcoming article, this procedure is regularly misused in that the scope of the injunction is not limited to the amount of alleged sales but is granted as to an entire account. If there is evidence of ten sales with a value of $100, the asset freeze should only be $100. If there is $1,000 in an account and and evidence of $100 worth of allegedly infringing sales are shown, the remaining $900 should remain unrestrained. Misuse of the temporary asset restraint is an ongoing and systematic issue that I continue to attempt to remedy on behalf of my clients.

Instead of or in addition to an award of profits, a plaintiff may also seek an award of damages. The plaintiff is required to prove the amount of damages though this is difficult to do with certainty. Damages may include plaintiff’s lost sales and diminution of the value of the trademark. If the Court finds that the violation was willful, the amount of damages must be increased by three times the amount proven by the plaintiff. An asset restraint is not properly available in order to establish a fund from which an award of damages may be satisfied.

Statutory damages appear at 15 USC § 1117(c). The statutory damages provisions of the anti-counterfeiting law were enacted in response to the perception that persons involved in counterfeiting do not keep good records upon which an award of damages might be based. The district court judge enjoys wide discretion to award any reasonable amount that he or she considers just. The plaintiff is excused from proving damages with the precision typically required. The range for awards of statutory damages are between $1,000 and $200,000 for non-willful infringement and $2,000 to $2 Million for willful infringement. What evidence and methods are used to determine whether a trademark violation is willful or non-willful requires an elongated explanation and so will likewise be the subject of a later article.

The purpose of statutory damages is to compensate the plaintiff for all types of damages that it may have suffered due to an alleged trademark violation. While statutory damages are for compensation, the judge may award a higher amount in order to deter both willful and non-willful infringers from further violation of trademark rights. In their judgements, judges often state that the damages need not necessarily bear any mathematical relationship to the amount of sales, though in the opinion of this practitioner, and some judges, such a calculation should be performed so that if, perhaps, for example, infringing sales were shown to be $100 the statutory damages award might be some multiple of $100. Most courts consider the size of judgements awarded in other cases, the need to deter others and, as is always stressed by plaintiffs, the severity of counterfeiting and the economic damage this inflicts upon American commerce. Courts may also consider the fact that an allegedly infringing item appeared online as justification for granting higher damages though, again, in the opinion of this practitioner, the logic behind this viewpoint is quite weak. All defendants in a case in which a court must set the amount of trademark violation damages are typically online retailers so that the result in cases where this logic is applied is that the award granted against every defendant is enlarged.

A pre-judgement asset restraint is not properly available in cases where an award of statutory damages is the sole type of damages awarded. As per above, an asset freeze is only proper where a plaintiff seeks an accounting and in an amount equal to the infringing sales which a plaintiff can prove. A plaintiff may simultaneously seek both an accounting and statutory damages but may not recover types of damages for the same injury. So if allegedly infringing sales were $100 and $100 is awarded as profits, the plaintiff could then proceed to argue for an additional award of statutory damages in order to compensate it for damage to its brand or lost sales but could not be awarded an additional $100 for profits under the rubric of a statutory damages award. Where judgement is entered in favor of a plaintiff and funds remain restrained for the purpose of granting an award of profits, the judge is likely to order an award of statutory damages from the amount restrained, an act which this practitioner believes to be wholly improper.

A plaintiff is entitled to recover its costs of action under 15 U.S.C. § 1117(a). This includes taxable costs such as filing fees, as well as out-of-pocket litigation costs such as photocopying, long distance telephone calls, service of process, and regular and express mail service, if such costs are necessary for client representation.

Attorney’s fees are available to a prevailing plaintiff in “exceptional” cases. Exceptional cases are often defined as ones in which the acts of infringement can be characterized as malicious, fraudulent, deliberate, or willful. Almost all cases are found to be willful so that an award of attorney’s fees is made in almost every case in which a judgement is entered. The judge will hold a hearing for the purpose of establishing the amount of attorney fees that may properly be assessed against the non-prevailing party.

As I explain in my article on the U.S. Trademark Litigation Process, the litigation process is adversarial and always uncertain. No two cases are ever exactly the same. Similar cases may meet with dissimilar results. No honest lawyer can guarantee a result. With this necessary disclaimer made, The Law Office of L. Ford Banister, II is dedicated to obtaining the best possible results for each and every client we represent. Whether your case is large or small, Attorney Ford Banister knows that it is important to you. Each client and each case handled by Attorney Ford Banister is given the time and treated with the consideration due to it. Attorney Ford Banister strives to protect your business and your assets and to protect and assert your rights under U.S. law.